In this article, you can quickly find a good overview of how costs change when a change in interest rates. We have here deducted from the 30% you get back on the tax.
Something that is quite clear about this table is that it actually affects quite significantly even with minor changes in interest rates. In fact, a loan of USD 1 million will be almost USD 150 more expensive each month if the interest rate goes up by 0.25%.
This is an interest rate change that can occur at any time
It usually takes a little longer, but if the interest rate on the same loan amount goes up by 2%, it means a cost of USD 1,167 more per month which is noticeable. A table like this shows how important it is with margins in the economy because there is nothing to say that interest rates will remain at the same level. It can change quite quickly which you have to do.
When you know how much it differs in money even with only minor interest rate increases, you also know how important it is to have a good buffer saved if you have variable interest rates. When the interest rate is variable (which is usually the cheapest in the long run), there is always a risk that the interest rate will go up and one must be prepared for this.
The solution to this problem is that you always try to spend a little more money on the mortgage than it really costs right now. If the interest rate is 4 percent, it is good to pretend that interest is actually 6 percent and then put away the whole difference that saved money.
This money can be used at a later date if the interest rate goes up or simply used to amortize extra if there is space. However, never use your entire buffer to pay extra.
Although they often talk about interest rates going up, they can actually go the other way. The table works just as well for this as a reduction of the interest rate of 0.25% would save you about USD 150 each month.